Tuesday, October 14, 2008

$?$?$?$?$?$?$?$?

Sorry to seem a bit stupid, but can anyone explain to me the difference between:
  1. bailing out the banks
  2. making funds 'available' to banks
  3. buying a stake in the banks
  4. guaranteeing the loans between banks
  5. buying up the bank's 'toxic' assets

Whatever the differences, they seem to have one similarity: they all cost hundreds of billions. And as these packages are announced one by one in breathless sequence, the German chancellor made the astounding statement that 'no bank would ever be allowed to fail !' (wish I'd taken up banking) And don't national parliaments have to approve this sort of thing, rather than being simply announced by presidents in their rose gardens?)

The stock markets race up and down, and the demented trader lemmings jump off the cliffs one day and sprint all the way up it the next. If prices move less than 5%, it is a really boring day.


What of the $700bn US bailout? That (as of today) is apparently of 'secondary' importance. We have a new package of $250 billion announced (is that part of the original 700, new money, or does it hardly matter?) for buying shares in the banks. Doesn't that announcement kind of affect the share price of the banks fairly insanely? What price is being paid for the shares? What is going to be done with the taxpayers' shareholding? Are all the banks' top brass continuing with the same bonuses and perks as before? Are the banks going to be differently run, maybe changing the previous universal policy of treating their customers with total contempt? That is one question easily anwered.

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